Epic Fail Guaranteed: Starting Your eCommerce Business Without Step Zero

The first method is used more often, although most companies aim to satisfy present needs, it’s still quite rare that they first build a customer base and then create a product for them.

If you have the big idea, the product, you’d better start a research. The first step is not marketing, or at least not the active part of it, as you don’t yet know what kind of marketing tools you should use.

The first step is to identify and get to know your potential market.

Then you can start formulating a strategy that fits that.

In this article we’ll go over every stage you should examine before setting up an online store.

 

We’re going to cover the following:

 

If you’ve come up with the product first…

Find your audience: TAM, SAM, SOM…

Get to know your ideal customer

If you build your audience first…

How to define needs

Google Trends and market needs

Follow the social trends

Ask them whether they would buy your product

If you don’t have the product, but there’s demand for it

Affiliate programs

Dropshipping

How can you find a dropshipping partner?

Choosing the right online store system

Don’t want to have your own online store? Try Amazon

How to plan your strategy

Increasing reach cheaply with smart research

Get some tools in advance

Social networking platforms

Start and maintain a blog

Create a bait offer and build a list

Be patient. Don’t start it right away

 

If you’ve come up with the product first…

 

Find your audience: TAM, SAM, SOM

 

Before you begin your market research, let us tell you about some basic concepts.

Try to identify your target market as precisely as possible, even at the very first stage of the research.

Many rookies make the mistake of trying to shoot at the whole market. This is called TAM, Total Available Market, which is the entire global or regional market for a product or service. This is the largest set of the Venn diagram.

Inside of it, there’s a smaller set, SAM, Serviceable Available Market. This comprises those people that can be served in reality.

 

tips The difference can be illustrated with a simple example: let’s suppose, you make movies. In this case every moviegoer would be your total available market.  But it’s obvious that you won’t reach all of them with your films and not all of them will be interested in seeing them.

A horror movie wouldn’t attract families and a romantic comedy is unlikely to fire up action movie lovers. Your serviceable available market is made up of those who like the given genre.

 

Finally an even narrower segment can be identified: SOM, Serviceable Obtainable Market, i.e. those who we can not only serve but obtain as well.

 

Get to know your ideal customer

 

If you have managed to define this core target audience, your serviceable obtainable market, then you can describe the segments and buyer personas.

Divide your serviceable obtainable market into major target groups – besides demographic data, take a look at through which channels they can be reached, what kind of media they follow, what kind of content they consume etc.

You can read about this topic in detail in our article about segmentation.

 

Define your buyer personas: set up such semi-fictional personalities that genuinely represent a market segment. Give them a name, list their habits, needs, problems and basic characteristics. Regard them as real people in order to get a good idea about how you can sell them your product.

 

If you build your audience first…

 

This scenario happens by chance most of the time: someone starts releasing content, say, writing in-depth technical articles or shooting and uploading entertaining videos on YouTube. If all goes well, a large and loyal group of followers develops, which has a considerable buying power.

Now the content creators realize that they can make money because of their popularity and start offering products. A YouTuber, for example, can start selling branded T-shirts, pillows and mouse pads.

Nowadays it’s getting more common that large corporations or marketing professionals start building up an audience prior to product development. They invest money, energy and time to build a group using content marketing.

 

They do all this because this way success is almost guaranteed: you only need to raise questions smartly and then you can create the perfect product to satisfy the present needs.

 

1) You may ask your followers to fill in questionnaires, write stories or reviews in email, or you can even organize a game describing their problems (in the form of user generated content).

2) Next, some brainstorming and sketching of product ideas can take place, e.g. you can show your 3D models or animated drawings to the audience, ask their opinion about them and then you can fine-tune your product until it fully meets the requirements.

Of course, this process can be time-sensitive: if planning takes too long, someone might steal your idea, but it can also happen that consumer needs get different in the meantime. However, it’s extremely cost-effective as this approach makes pre-sales processes much smoother and ensures much better chances for success.

 

How to define needs

 

Before the Internet, telephone surveys or focus groups were used for gauging market needs. Nowadays, it’s basically enough to ask Google.

 

Google Trends and market needs

 

Google Trends helps you to find out how interest in different products or product categories changes over time: the graphs for properly selected keywords not only show search numbers for the past months or years, but you can see these broken down for regions as well.

It’s worth examining three things more in-depth (using more complex SEO tools, like SEMRush):

 

  • How many organic searches were started for the given keyword?
  • How tough is the competition (how much would it cost to advertise with AdWords)?
  • Is there an uptrend or a downtrend?

 

It’s also worthwhile for you to watch social networking sites as well – for the reason that both content consumption and ecommerce started to shift towards these platforms a few years ago.

 

Follow the social trends

 

Find a tool with which you can track how the keywords, related to your products, perform on the most popular social media sites.

Such a tool is Keyhole, which measures real time the popularity of hashtags on Facebook, Twitter and Instagram. (You can use it also when you want to sell a seasonal product or create content with the help of newsjacking.)

If you see that the keywords, connected to your products, are not popular in social media, it doesn’t mean they don’t care about them – in this case you may only need to call their attention to these products and start creating relevant content and run promotions.

 

Ask them whether they would buy your product

 

If you have defined your target group, then you can find those websites where they socialize, talk to each other, ask and answer questions etc.

On such platforms you can not only share your content, but also ask the users if they would buy your product at all. Additionally, you can gather some ideas about how you could improve the product – whether it fully meets the expectations, solves the right problem or has a good price.

If you find out, with any of the techniques, that there is considerable demand for a product, next you should run a competitive analysis.

Check how many ecommerce stores sell similar products, how successful they are, what marketing and sales strategies they follow, how they reach out to their audience etc.

 

If you don’t have the product, but there’s demand for it

 

It well may be that you don’t have your own products. E.g. you don’t have the time, funds or the idea for developing one, but you’ve found a market niche.

In this case you may look for somebody who has or had such a product and they are not your competitor. Here are a few solutions for that.

 

Affiliate programs

 

Just imagine: you have an audience that has purchasing power, they’re loyal, you can easily reach them. You have everything at your hands, but you don’t have a product and you don’t have the money to develop one.

Now, you can sell someone else’s product – you don’t need to start a lengthy and costly product development process. You can be a reseller or a distributor of a brand that has similar values to yours and that your audience accepts easily.

 

The simplest way is to join an affiliate network: the biggest ones are ClickBank, ShareASale or CJ Affiliate. Here you encounter a ton of products that you only need to choose from and resell them.

 

The greatest advantage of such a network is that the majority of the work has already been done by others so that it will not affect your budget considerably. Most probably the biggest costs you will face will be related to setting up your brand new online shop.

 

Dropshipping

 

Dropshipping is becoming more and more popular among online stores as well. It gives you the opportunity to be able to sell products without having to make large investments. The idea is simple: the online store doesn’t have its own goods on hand, it “connects” the customer with a wholesaler.

The shopper orders the item in the online store, pays for it and gets it delivered by the wholesaler.

So the ecommerce store is basically an intermediary in the shopping process.

 

This model, however attractive it may seem, has some drawbacks as well:

  • Because dropshipping is quite an easy way to do business on the Internet, there’s a lot of competition in terms of nearly all kinds of products.
  • The wholesalers are generally not very good at online marketing, but on the other hand, the smaller online shops fight hard for market share. This often leads to price wars, which bites into the profits of all the competing participants.
  • The process itself has a number of problems: you need to communicate with the wholesaler continuously and watch the inventory. And even in spite of this, it can happen from time to time that a product is not available anymore after a customer has ordered it. This may result in customer disappointment and loss of trust.
  • The involvement of a third party makes the sales process more complicated ‒ more paperwork, more things to keep in mind, more complex accounting.
  • Marketing the products can be problematic too. It’s always easier to sell your own products since you know them inside out, you know exactly what they’re capable of as well as what it’s like using them.
  • This can be quite difficult with a product you’ve never held in your hands, never used to solve a problem. So your communication about the product may not be 100% credible and answering questions in this respect can be problematic.

 

How can you find a dropshipping partner?

 

If you know exactly what type of product you want to sell, the simplest way is probably trying to find the manufacturer and then ask for a list of wholesalers.

You may start your search on Google, but keep in mind that such wholesalers are not very easy to find – they are quite inexperienced in online marketing, having old-fashioned websites etc.

Despite this they may turn out to be good partners, so don’t judge on appearance.

 

Choosing the right online store system

 

A lot depends on what platform you use to sell your products. There are many free and paid ecommerce systems out on the market.

We’ve compared the most popular ones in several articles here.

After having looked at these comparisons, you’ll probably have a more precise idea which platform suits best your expectations.

 

In a few words, let’s summarize the key characteristics of the three major systems:

  • Without any partiality, we can state that Magento provides the highest quality. This comes at a price, of course. The main benefits are: high capacity, lots of options and can be fully customized. You can create any kind of store you like, both on terms of appearance and functionality. However, professional developers need to be involved to build up the perfect store, and this costs money and time.
  • WordPress based free-of-charge WooCommerce is another very popular platform. Since it is a WordPress “product”, it’s rather easy to use and can also back nicely any content marketing strategy. On the other hand it is not as sophisticated as Magento so it is not that customizable and features less functions.
  • Finally, Shopify is a fine choice for simpler online stores with smaller traffic, where you can find an array of useful functions, e.g. a simple payment process. Unfortunately, because of its simplicity, it is the least customizable system among these three.

 

It’s also worth examining what exactly your target audience wants.

If your product is rather complex or you market various types of it, you may start a store in which the users can pick the attributes they are interested in and are provided with advanced search options.

If you offer only some simple products, then you should create a very simple purchase process where the user can select the desired items and after just a few clicks close their purchase.

 

Don’t want to have your own online store? Try Amazon.

 

There’s also the option that you don’t build up your own store, but offer your products on a different website. Your best choice may be Amazon.

On Amazon’s site, in the footer you can find “Sell on Amazon” where you can register for the service, after which you’re given the opportunity of creating a store within Amazon’s platform.

One disadvantage is that because of the commission you pay to Amazon, your income will be lower, but on the other hand your traffic may be quite high as the ecommerce giant is behind you.

Adding products is simple, the user interface is innovative – beyond giving the necessary information, you only need to check if that same product is offered elsewhere on Amazon’s platform.

 

How to plan your strategy

 

When you’ve finished with the market research, product development and segmentation, it’s time to elaborate your sales strategy.

Luckily, a lot of materials are available for free on the Internet that teach you how to market and sell your products. You just need to invest some time and energy to take a look at these.

Content marketing, for example, is an excellent tool to build up your audience.

We’ve already written about why it is wise to run a blog page for your ecommerce store and how you can do it effectively.

We’ve also described how you can promote your content without spending any money.

 

Increasing reach cheaply with smart research

 

Now let’s take a look at some free strategies that help you to raise awareness for your products without spending large chunks of your budget.

 

You can try a simple technique: watch how your competitors communicate about similar products:

  • What kind of websites refer to them?
  • Which are those websites that your target audience visit regularly?
  • Where do they visit those websites (smartphone, tablet or desktop?
  • From which points or sections of the page are they redirected to the given online shop?

 

Use Moz Open Site Explorer: you can find out which pages contain backlinks pointing to your competitor’s website and also what kind of content includes them.

 

tips Influencer marketing is another good idea: you create content about your products that is useful to your audience ‒ not only the product is introduced, but also how it solves problems or whether it can be used in some extreme ways.

 

You can promote this kind of content among influencers.

Don’t hard sell the products, just try to get attention and collect “likes” to increase visitor numbers of your website. You can focus on selling in a later phase of the sales funnel.

Send your pieces of content to influencers and with a little luck there will be some that will find them interesting and share them or mention them in their posts so that you’ll get valuable and relevant backlinks. This all will improve your site’s ranking and strengthen credibility.

Take advantage of guest blogging as well: find websites for which you can write articles as an expert.

Be active on professional sites, in forums and groups and build up your personal brand.

You’ll need to invest time in this to achieve awareness and acknowledgement, but in the long run it’ll be beneficial for your whole ecommerce business as well.

 

Get some tools in advance

 

There’s a bunch of tools that are worth having before you launch your online store.

Now we’re listing those that you can use with only a minimal investment.

In the beginning they help to raise reach and awareness and then to sell directly.

 

Social networking platforms

 

Create your business accounts with all popular social media websites.

Primarily these are Facebook, Instagram and Pinterest.

Creating and scheduling content beforehand make sure that you’ll post on a regular basis and making social posts published automatically can save you a lot of time.

However, you need to follow all activities and if you’re asked some questions or required to send some content, you should reply in a short time.

 

Start and maintain a blog

 

The aforementioned promotional and awareness techniques work best if you already have a blog page which is known and followed by your audience and also by a number of experts in the given field.

Plan ahead what you’re going to write about and publish content regularly.

Don’t forget that you’re not going for sales here, but to get more followers.

Prepare useful quality content with which you can get ahead of your competitors. Read our article about the strategy you should follow here.

 

Create a bait offer and build a list

 

You can start collecting email addresses even before setting up your online store.

For this, it’s worth having a bait item that proves to be useful to your audience, at least so useful that they are willing to give their email addresses in exchange.

Such a bait offer can be a free e-book or video guide series or just a newsletter subscription that provide useful information.

Gauge what kind of information your audience is hungry to get and make an educational material of it that has more value than any of your competitors offer.

Make it available through a sign up page, so right after giving their name and email address, they can download this bait product.

Your email list starts growing immediately and when launching your online store, you’ll have a number of potential shoppers already available to whom you can send product offers.

 

 

Be patient. Don’t start it right away.

 

No matter how awesome ideas you have at the moment, it’s not at all for sure that they’re going to bring you success.

It’s the preparation phase we’re talking about her.

Leave time for it. Don’t rush.

It’s not just about getting to know your target audience. You’ll also find out whether you need to fine-tune your product, what ways could work best to sell it and what communications strategy to apply in the future.

Follow the steps described above and you’ll most probably be able to kickstart such an online shop that will return your investments abundantly while truly making the life of your customers easier.

 

 

eCommerce vs. Brick and Mortar: What Last Year’s Holiday Figures Tell Us About the Future of Commerce

We’re going to cover the following topics:

  • Sales Were Up But Habits Are Changing
    • Online Sales Grow 11% in the US
    • US Brick-And-Mortar Concerned with 2.7% Growth
  • Amazon’s Record Sales and Device Success
    • Will Voice-Based Shopping Dominate?
    • 2% of Digital Procrastinators
  • Declines Hit the Department Store
    • Macy’s
    • Sears and Kmart
    • Insight from CVS’ Closure Plans
  • The 4 Big 2016 Takeaways
    • Convenience Trumps Almost Everything
    • Compete with Experiences
    • Have a Digital Backbone
    • Days Matter

 

Sales Were Up But Habits Are Changing

 

The world of shopping is going through the same shift that the mail, libraries, and banks have already experienced: digital and mobile will disrupt almost all assumptions we have and will either support services (apps showing your balance) or decimate them (Google is the modern Dewey Decimal).

 

Mastercard’s SpendingPulse says that total retail sales rose 4% from November 1 through December 24. That’s a bit above the 3.6% growth estimate from the National Retail Federation. It’s also a nice boost over the 3.2% increase that was experienced in the same time during 2015.

The good news is that in-store sales were up overall during the holiday, the bad news for them is that they’re being outperformed by online sales.

Fortune estimates that online holiday sales grew eight times faster online compared to in-store sales growth.

Broad trends in most major sectors are that growth is occurring, but not always enough to put investors or business owners at ease. Clothing had an incredibly hard start to winter as the market segment’s sales rose only 0.1%. Appliances and electronics were up 8.5%.

This tough going for clothes is probably a big reason that we’re seeing threats to department stores and more apparel-centered storefronts.

Shoppers choosing online purchases and walking into fewer stores has shifted the retail landscape in profound ways, and not even the most established brands are guaranteed safe.

The holiday season also showed a mix of spending habits that will need more time to fully discover. For example, 64% of Americans who made an online purchase picked up their goods in the store and then made another in-store purchase during the weekend after Thanksgiving.

 

Online Sales Grow 11% in the US

 

Online sales are continuing their upward tick with at least an 11% growth for the 2016 holiday season. More than 21% of all holiday spending this season was done online, compared to just 15.4% in 2015. Whether it’s avoiding crowds or having more time to shop, it seems to be a trend that’s only going up.

Packages and shipping might give us the most surprising insight into how much online shopping has grown. UPS said it believes it will have delivered 14% more packages in 2016 because of the rise of online shopping to reach past the 700 million mark. FedEx also projected a 10% bump overall.

However, UPS also gives us a good idea that sales forecasts may trend down as more data comes out, as the brand expects to have shipped 5.8 million packages back to retailers during the first week of January.

Amazon was far-and-away the leader in the digital space.

It secured roughly 38% of the total online sales market for the US 2016 holiday season, while the next closest competitor was Best Buy at just 4% of the market.

Target has the potential to be a sign of hope for retailers based on its Black Friday deals, but much of this is focused on its digital footprint. Target reported its largest online shopping days ever during its “10 Days of Deals” promotion running from November 22 to December 1.

Online demand was significant enough to crash Target’s website during high demand. The company offered free shipping on all of its online purchases through Christmas, which is seen to have been a successful tactic.

 

2016 holiday season retail stats, infographic

 

US Brick-And-Mortar Concerned with 2.7% Growth

 

Traditional retail stores felt a significant blow to the growth they needed to remain viable, even when their online stores performed especially well.

 

For example: J.C. Penny Co. had physical retail sales fall 0.8% for its nine-week block that included November and December, but it’s online platform had a double-digit growth.

 

When looking across research that’s come out for the holiday, brick-and-mortar chains had sales decline 12% in November. December was mixed, with traffic down 12% but the average transaction ticked up 5%. That pegs the growth for the period at roughly 2.7%.

It’s important to note that net sales were down 10% compared to 2015, and firms such as RetailNext say the overall growth is largely due to a 6.5% sales increase in the final days before Christmas. Its report notes that the average shopper was spending 11% more during that week across all channels.

 

Retail Bright Spots

Many big box retailers have announced dismal results, especially for their brick-and-mortar locations.

However, there were some interesting brands who bucked the trend:

Lululemon had a “strong” holiday season in stores and digital channels with mid-single digit same-store sales increases, increasing its Q4 guidance minimum by $10 million to the $775m-$785m range.

Ollie’s Bargain Outlet had a good season in its discounter locations with holiday sales showing a 16.3% gain overall, plus a 1.9% comparable store growth.

PVH Corp. recently raised its earning guidance thanks to the success of its Tommy Hilfiger, Calvin Klein, and Van Heusen brands’ performance, even in department stores.

Gap posted a 2% increase in sales across its footprint for November and December compared to the year earlier. Same-store sales rose 1% and 12% for its Gap and Old Navy brands, respectively. That appears to be the first such monthly Old Navy gain since early 2014.

Urban Outfitters had same-store sales rise 1.5% in November and December, led by gains in Urban Outfitters and Free People brands.

Here’s what helped, according to analysts:

  • Wages are higher by about 2.5% compared to 2015 and continue to grow compared to recent years
  • Overall employment continues on an upward trend, with unemployment reaching its lowest level in nine years in November, according to Labor Department data
  • Gas prices remain low — this statistic may lose some significance in the future as the oil and gas industries are starting to hire more Americans and make up a greater part of GDP in the US.
  • Consumer confidence levels in December hit their highest level since August 2001.

 

Amazon’s Record Sales and Device Success

 

Amazon had its “best ever” holiday season and noted a wide range of purchase stats including

  • users buying enough luggage to fill 20 Boeing 747s
  • and enough 4K TVs to reach the peak of Mount Everest more than 9 times over.
  • Customers bought a watch, on average, every 1.5 seconds during the holiday season to the tune of 2.5 million.

 

The company didn’t divulge specific sales figures — keeping in line with past years — but the increase in purchases is worth noting as the company counts a growing number of Amazon Prime members. The Institute for Local Self-Reliance (ILSR) published a November study that says nearly half of all U.S. households are Prime members.

Slice Intelligence’s market research suggests that Amazon grabbed 38% of the online market share in the 2016 holiday season, up only slightly from 37.9% the year before.

The growth in overall online shopping means that a small bump was able to deliver a significant set of gains for Amazon — for clarification sake, the data suggests Amazon would’ve needed to increase sales by $200 million year-over-year to grow just one percentage point.

 

Will Voice-Based Shopping Dominate?

 

The ILSR believes that, even before the holiday season, Amazon was accounting for roughly half of US online shopping in terms of spending, and that half of online shopping searches start on Amazon’s site or apps.

There is the potential for that last statistic to grow even higher, as the company notes that use of its mobile app grew by 56% during the 2016 holiday season. Users are spending more time in the Amazon ecosystem, which opens fewer doors for rivals — whether they’re digital or brick-and-mortar competitors.

As Amazon’s personal assistant devices grow in popularity, there is even less opportunity for rivals. Alexa makes purchases directly on Amazon and re-orders take place without any additional interface.

 

49.2% of Digital Procrastinators

 

“Digital has taught people they can wait to the last minute,” Forrester Principal Retail Analyst Brendan Witcher said recently, and Amazon was the biggest beneficiary.

According to research data from Slice Intelligence, 49.2% of people making an online purchase on the Monday before Christmas fired up Amazon. Most analysts believe this was due in large part to a combination of available goods and Amazon’s two-day shipping offers.

Amazon’s share of online sales was roughly 25% on Black Friday and saw a steady rise to December 19th. Christmas day was also strong for Amazon, securing 46.1% of online sales that day — there hasn’t been much reporting on the “cause” for this, but it is likely a combination of extra-last-minute shopping and consumers testing out those new Alexa devices.

 

Declines Hit the Department Store

 

The department store market is worth approximately $165 billion in annual sales, but revenue has continued to fall at an annualized rate of 3.5% since 2011. More than 51% of those sales come from apparel, a market segment that’s both declining and heading online.

But, when looking at this holiday season itself, department store sales were down nearly 4.8%.

Consumers heading to the mall are shifting their attitudes and seeking out a way to easily and quickly make their purchase. The one caveat, per Deutsche Bank, is when an apparel retailer is offering a deep discount, but that means always competing on sale prices in a segment that already had thin margins.

 

Store closures: Overall, Americans are also spending less on apparel and accessories, and this decline will have significant impacts in 2017. Morningstar Consumer Equity Strategist RJ Hottovy recently said that the market should expect consolidation and shifting competition as larger brands close stores en masse, with some retailers expected to file for bankruptcy.

 

Most major department stores have been slowly closing stores for a few years, with e-commerce competition getting much of the blame, and 2017 appears to have an accelerated path to turning out the lights.

 

Macy’s

 

As the holiday season came to an end, Macy’s announced it will be closing more than 70 stores ending 10,000 jobs due to a poor performance — these fall in line with its announcement last fall to close 100 stores in total — and are believed to be fueled by online competitors.

The company noted that sales declined 2.1% on a comparable store basis in November and December when compared to 2015. Macy’s also dipped its per-share earnings goal for fiscal 2016, which ends on January 28 for the company, from the $3.15 to $3.40 range down to the $2.95 to $3.10 range.

Jeff Gennette will take over as CEO in Q1 2017, though he isn’t expected to change from this series of closures.

 

Sears and Kmart

 

There are expected to be more than 50 Sears and Kmart store locations closed in the early part of this year, with liquidation sales at many of these locations already starting. Overall for its fiscal 2016, Sears will have closed more than 200 stores and leave it with less than 1,500 stores for the start of its fiscal 2017.

Sears has announced that revenue fell 13% in its most recent quarter, while losses grew from $454 million to $748 million. Same-store sales were down 7.4% on average across Sears and Kmart stores. That was the 20th straight quarter of missing sales and revenue targets.

Sears Holdings took out a $200 million secured standby letter of credit on December 29th in order to fund its operations.

 

Insight from CVS’ Closure Plans

 

CVS Health continues its push to becoming an integrated health care provider as much as a convenience store. This shift is causing the brand to look for cost-cutting measures, taking aim at an estimated 70 store closures in the beginning of 2017.

CVS’s decision-making was most likely not impacted by the recent holiday season. However, it’s shift toward healthcare services and related goods as a main revenue driver — especially as significant healthcare changes loom in the federal government — may point to the company’s change in thinking for more traditional models.

The brand hopes to develop a more consumer-oriented care model and put healthcare in a retail-like setting while scaling back in locations where it cannot deliver that value proposition.

 

Where Is It Going?Much of these sales are being cannibalized by online platforms, both from the digital channels for department stores as well as other competition.

Amazon deserves another mention because it is not only taking control of electronics and ‘smart’ stocking stuffers, but is reaching into the heart of these department stores: clothing and apparel.

Amazon has the potential to become the U.S. apparel retailer by the end of 2017 — not digital retailer, any retailer — with a projected 30% growth to reach $28 billion, according to Cowen and Co. That would give Amazon control of more than 8% of the market.

 

The 4 Big 2016 Takeaways

 

When it comes to the 2016 holiday, we’re looking at a growth of digital sales as well as strong returns for companies that run across multiple channels and make quicker market changes. There are four chief takeaways retailers should heed, some of which are in their controls and some that aren’t.

 

Convenience Trumps Almost Everything

 

Amazon is poised to become the largest American clothing retailer despite not having dressing rooms or a quick location to return goods or swap out for a larger size while you’re running your errands.

 

tips Shopper Survey: When asked why it was still so popular, despite not having these two traditional apparel staples, customers said that Amazon was more convenient and its free two-day shipping was a big advantage, per Cowen & Co. data. Rounding out its top benefit were the stellar customer service Amazon offers plus the ability to see a host of product reviews as users shop.

 

Amazon combines the ability to shop, do research, and solve problems in a single location, which you can access from any computer or smartphone, making it one of the most convenient shopping options possible today.

And, on those big deal days like Black Friday and Cyber Monday, you can do all that shopping in your PJs without having to stand in a single line.

 

Compete with Experiences

 

Brick-and-mortar retailers that are performing well are working to differentiate themselves from the online experience. They target shoppers who want more than just a quick experience and may need some additional help selecting their purchases.

Concierge services are designed to make customers feel special, and they are needed for big-ticket sales items.

Lululemon credits its shopping experience with leading to significant sales increases during the holiday season, engaging them across multiple channels.

Clubs and rewards memberships are common, but few have a significant benefit that customers can see each time they shop. Amazon was successful with the concept because its Prime membership takes away shipping costs for each and every sale.

In-store experiences don’t have as obvious a benefit, but a personal touch can improve and give the customer a reason to return. The personal relationship is able to drive that return visit if it feels helpful and treats the shopper as a unique individual.

 

This can even be seen in Millennials:

The best example is found in banking. Roughly 90% of Millennials have a relationship with a traditional financial institution. The customer service can make-or-break their banking relationship much more than other aspects.

“Millennials are typically not scouring the Internet to find the coolest free checking account… They’re looking for things they identify with,” notes Avidia Bank Assistant VP of Retail Operations and Strategy CarrieAnne Cormier.

They judge the bank based largely on whether or not it can create a connection with them. However, going back to our first takeaway, the bank does need a convenient location to be successful. It also needs digital services that are not frustrating, which dovetails to our next takeaway for brands.

 

Have a Digital Backbone

 

Selling in more locations, especially on digital, is a necessity.

And that seems to be true regardless of brand. Customers are demanding more online access, and having a bevy of locations could drive traffic based on sales and promotions, as well as other factors.

And, it may pay to have channels that you don’t completely own. During the holiday season, Amazon had a 70% increase in third-party sellers using its Fulfillment by Amazon service. That did put them in the giant’s grasp, but Amazon shipping 50% more items from third parties means their products were delivered in two days and likely put under more trees and in more hands.

 

Days Matter

Our final takeaway is simple, but it’s also the reason there was a collective sigh of relief from most retailers this holiday: a few extra days can make all the difference.

The week before Christmas was the biggest in terms of point-of-sale results for most merchandise categories, both in-store and online.

Total dollar sales for the eighth week of the holiday season were up 16% compared to the same time in 2015.

This is important because this holiday season was 1% behind the 2015 holiday season leading into week eight.

The week ending December 24th saw sales of toys increase 26%, apparel 17%, high-end fragrances 16% and technology 11%.

Compared to the year before, the 2016 holiday season had two more shopping days; a shipping deadline that likely forced more people into physical stores to pick up goods bought online as well as last-minute; and had a later Hanukkah shopping season — Hanukkah was Dec. 6 through 14 in 2015.

This combined  “more than made up for what was lost in prior weeks,” says NPD Chief Industry Analyst, Marshal Cohen.

The final boost for retailers might have come from timing, beyond their control, and we could be looking at a much lower growth rate if things were slightly different. Sometimes, it all comes down to a little luck.

 

Magento AWS – The Definitive Hosting Guide

CONTENTS:

Cloud Computing and AWS Who to use cloud services? Any special requirements? Installing Magento in AWS What is managed hosting? Talking to a cloud hosting provider Is AWS secure? Suitable AWS EC2 Instances Installing Magento on AWS EC2 (Guide)

 

Cloud Computing and AWS

 

Cloud computing is a network-based shared computing model, where resources, like servers, storage applications and services, are not tied to dedicated hardware but are available in a managed, shared computer infrastructure typically in an on-demand fashion. Thanks to this

        • the user doesn’t need to know about the details of service management and configuration,
        • there’s no need for expertise in low-level infrastructure management,
        • the focus is on the effective use of technology and accessing resources fast and easy.

These services are accessed by users via a computer network.

Based on access types we can define public and private clouds.

A cloud resource   can be accessed through the Internet through a local area network, but the main difference lies in who owns the resources. Practically, we can call an infrastructure a private cloud where every single element is managed privately and is connected to the public network through an access point (firewall).

 

To put it very simply: A common type of cloud based-service is when it is used in a corporate environment, but the infrastructure that provides this service is operated outside the company and the servers are not run locally.

In many cases you don’t even know where the elements of this infrastructure are located. However,  the  details of availibility and safety features, as well as, of course, the costs of the services are well defined.

 

Cloud computing has been a major factor in the IT world since the mid-2000’s.

The origins and first implementations of cloud computing are well summarized by IBM here. It was first an idea of J. C. R. Licklider in the 1960’s, who visualized an “intergalactic computer network” interconnecting everyone on the globe who can access its resources “remotely” (Licklider was an American computer scientist and psychologist, responsible for the development of ARPANET, the direct predecessor of the Internet).

 

Amazon has been providing cloud services since 2006.

 

Amazon’s services can be divided into three main categories:

      • SaaS (Software as a Service)
        • The software itself is provided as a service. Some applications can be used via a secure http/https protocol through a web browser. On the other hand, some computation-intensive applications need a special client on the user’s end (e.g. online games requiring live  connection or the Spotify desktop application).
      • PaaS (Platform as a Service)
        • It provides the environment that is needed for running, managing and running the required applications with proper load distribution, process management, user interface and security updates.
      • IaaS (Infrastructure as a Service)
        • It provides virtual hardware (server, block storage, network connection, computing capacity).

 

There’s a huge number of smaller or larger companies that offer cloud-based services to their clients, but the market is ruled mainly by 4 big companies:

 

To be able to serve your Magento store seamlessly and reliably we suggest you run it in the most appropriate hardware environment.

 

What we use: We at AionHill primarily use AWS for hosting Magento ecommerce stores. Some of these  are hosted in a hybrid environment, some use exclusively Magento AWS hosting and some are served in a private cloud, either ours or the client’s.

 

AWS is utilized by a huge range of big corporations, such as

      • Netflix,
      • Dropbox,
      • HTC,
      • Hitachi,
      • NASA,
      • SoundCloud,
      • Spotify
      • and Samsung.

It’s also important to note that AWS, just as its three main competitors, has a robust global infrastructure with redundant data centres, so downtime is basically never experienced.

At the moment AWS has 42 Availability Zones in 16 geographical regions worldwide. There are 7 data centres in Europe alone, located in Frankfurt, London and Ireland. Amazon is expanding its services globally, new data centres will be launched soon in China and Paris as well.

 

graphic-info-on-hosting-providers

Please note:  The figures for the “Number of eCommerce Sites by Platform”, provided by BuiltWith, might not be the actual, precise numbers. In our opinion these should be higher. However, these stats can give a rather precise picture about the proportions between the platforms.

 

Who do we recommend cloud services to?

 

Cloud services have their own advantages both for small or medium sized and big enterprises, that make it very appealing for these segments.

Many say that this technology is the future of IT, but there’s a good number of sceptics, too, that raise issues mainly about security.

Cloud-based solutions: pros and cons

Not for every kind of business

Cloud-based computing services can be beneficial to any type of small or large companies, but a smart decision is needed on what kinds of services and which parts of the IT infrastructure should be actually moved to the cloud. It is mainly recommended to migrate applications that are inherently connected to external services or solutions.

 

Security concerns (?)

It is rather difficult to find an appropriate cloud-based environment that complies fully with the American PCI security standards (regulating credit card data management). However, Amazon offers such VPCs that meet the PCI-DSS requirements. Of course, it has its price.

 

Losing control over data stored in the cloud

To solve this problem, you can look for an experienced company which guarantees that your data will be stored safely and will meet all rules defined by you, no matter if your company is a law firm or a financial services provider. Also, by making local, daily 3rd party or local backups of your cloud data, can be a simple, but effective solution.

 

Price

If you use cloud-based services, many times there’s no need to buy additional dedicated hardware, which helps you save money. The allocated resources can also be scaled up and down rapidly, which is another great advantage.

The main pro is that you don’t have to invest heavily right at the beginning.

Neither should you calculate with a TCO budget for these types of technological assets because you don’t own them. Costs and fees related to the cloud computing services are due usually on a monthly basis. If you make a commitment for a longer term, it can bring you a considerable price discount as well.

Performance scalability, in both directions is another advantage. Due to this, services can be tested and adjusted in different traffic scenarios easily at relatively low costs.

 

There are fewer and fewer companies that we don’t recommend AWS cloud hosting to.

A couple of years back, enterprises that processed big chunks of data and used considerably large bandwidths could use cloud services with difficulty or could not use it at all. Today it’s not a problem. Transferring terrabytes of data we should use the AWS SnowBall service. In case of dedicated, broadband connection, AWS DirectConnect is the best choice.

 

Are there any special requirements for hosting a Magento store in the AWS cloud?

 

Amazon Web Services offers very flexible solutions that are easy to tailor and scale depending on traffic and use-case.

Thanks to the AWS TCO calculators, you can see all the costs to be paid, and you can be sure there are no hidden cost elements.

Everything is predictable, practically, in the case of HDDs, writing or reading costs of hard disk usage can be precisely defined. It may sound odd at first, but thanks to this you truly pay for those services that you actually use.

 

Installing Magento in the AWS cloud

 

If you don’t have a few years’ experience in sysadmin or devops, it’s wise to let an expert team do this job. On top of cost efficiency, this way you are also guaranteed business continuity.

 

So the point is: AWS makes it possible to create a flexible, excellently scalable infrastructure for your Magento ecommerce store.

 

Pricing, of course, depends on the computing capacity of the given resource and on the storage size to be used.

The table below shows the key parameters and costs for some cloud resources (AWS calls its host computers “Instances”):

 

Instance Type vCPU  Memory (GiB)  Storage (GB) Networking Performance Physical Processor Clock Speed (GHz)
t2.medium 2 4 EBS Only Low to Moderate Intel Xeon family Up to 3.3
t2.large 2 8 EBS Only Low to Moderate Intel Xeon family Up to 3.0
t2.xlarge 4 16 EBS Only Moderate Intel Xeon family Up to 3.0
t2.2xlarge 8 32 EBS Only Moderate Intel Xeon family Up to 3.0
m4.large 2 8 EBS Only Moderate Intel Xeon E5-2676 v3 2.4
m4.xlarge 4 16 EBS Only High Intel Xeon E5-2676 v3 2.4
m4.2xlarge 8 32 EBS Only High Intel Xeon E5-2676 v3 2.4
m4.4xlarge 16 64 EBS Only High Intel Xeon E5-2676 v3 2.4
m4.10xlarge 40 160 EBS Only 10 Gigabit Intel Xeon E5-2676 v3 2.4
m4.16xlarge 64 256 EBS Only 20 Gigabit Intel Xeon E5-2686 v4 2.3
m3.medium 1 3.75 1 x 4 SSD Moderate Intel Xeon E5-2670 v2 2.5
m3.large 2 7.5 1 x 32 SSD Moderate Intel Xeon E5-2670 v2 2.5
m3.xlarge 4 15 2 x 40 SSD High Intel Xeon E5-2670 v2 2.5
m3.2xlarge 8 30 2 x 80 SSD High Intel Xeon E5-2670 v2 2.5
c4.large 2 3.75 EBS Only Moderate Intel Xeon E5-2666 v3 2.9
c4.xlarge 4 7.5 EBS Only High Intel Xeon E5-2666 v3 2.9
c4.2xlarge 8 15 EBS Only High Intel Xeon E5-2666 v3 2.9
c4.4xlarge 16 30 EBS Only High Intel Xeon E5-2666 v3 2.9

 

tips Explanation: Instances marked with a “t” are used for testing, the “m” (memory-intensive) types can be used for processing larger databases or installing single servers. The large capacity “c” (CPU-intensive) Instances are recommended for hosting Magento stores.

 

Specifications of EC2 servers and the entire list can be seen on AWS’s website.

For the latest prices please check AWS’s on-demand pricing here.

 

AWS Services

 

In the following, we give you a list, with short descriptions, containing the services that are necessary for hosting a test Magento store:

 

      • Amazon EC2– Amazon Elastic Compute Cloud allows you to start and control computing resources of virtual machines, and to choose from a wide spectrum of operating systems already installed. You can select either an already existing AMI (Amazon Machine Image), or an image file imported from a different location.
      • Amazon VPC– with Amazon Virtual Private Cloud you can define an isolated private network in the cloud, where you can launch different services and resources. You are totally free to configure your network just as you desire, including the creation of your own IP range and sub-network as well as configuring your routing tables and network gateways.
      • AWS CloudFormation– AWS CloudFormation is a simple way to create and supervise the related AWS services, and also to update them according to your schedule. This is a cloud automation tool for creating predefined infrastructures and services described in a template file. Thanks to this you don’t need to configure the selected resources manually. Although it needs a lot of effort and expertise to create this template at the beginning, the new cloud infrastructure later can be handled with less competence.
      • Amazon RDS– It’s easy to create, manage and scale an Amazon Relational Database Service. With this solution it takes only a few minutes to install a MySQL database, together with a re-definable hardware capacity.
      • Auto Scaling– It helps to restore and maintain server accessibility by automatically increasing or decreasing computing capacity via starting or stopping Amazon EC2 Instances.
      • Elastic Load Balancing– It automatically manages and allocates inbound network traffic if you operate more than one Amazon EC2 Instances.
      • Amazon S3– Amazon Simple Storage Service is a safe and efficient way to store all your data in a cloud platform. It is mostly used to store multimedia files, for instance it is here where EC2 servers access the images of your products appearing in your online store.
      • IAM– AWS Identity and Access Management allows you to create users and control authentication, permissions and access parameters in relation to the different services and resources. Using IAM, you can further create access keys, permissions and rules, just as you see them with well-known operating systems.
      • CloudFront – as a content delivery network (CDN), it handles static content. It manages content load in a way that the user gets the required content (e.g. pictures) from the closest available servers in the fastest way possible so that page load times stay short.

 

Naturally, you have the opportunity to try AWS Cloud for free.

You have two options for that: AWS Free Tier and Hosting Provider Demos.

 

AWS Free Tier

 

If you like challenges or have the necessary operating competence we described earlier, then after making a registration on Amazon you’ll be granted a one-year free access to certain AWS solutions.

Don’t be surprised if you need to give your credit card data in the registration process. It is so because of the confirmation by phone and the circumstances to be described below.

We advise you to make your selections with special attention because you can easily start or configure such resources that will cost you more money than necessary.

Luckily, you can follow your consumption on the Dashboard, but it’s always good to get information about the service you’re about to launch. To make it easier, AWS labels those resources that are free to try.

If you see the “Free Tier Eligible” sign with a service, then you should not worry.

 

      • You can store files in the AWS Cloud,
      • You can create users and authentications,
      • Use business analytics services,
      • Start a micro server with an operating system of your choice for launching the services
      • Run commands in its command shell.

 

But don’t just yet get too excited: this free server will not meet the technical requirements of your Magento store!

However, if you feel the urge to get a closer look at the “free version” of AWS, just click the link and you can start discovering this cloud platform right away.

 

Hosting Provider Demos

 

Many hosting service providers aim to obtain new clients with one-week or one-month free to try offers or pre-configured environments.

However convenient it seems to migrate your store to the cloud in 5 minutes, it has an extremely low chance that your specific needs and expectations will be matched (in any way) by a free hosting service.

Ready-made hosting environments, understandably, are not prepared and tailored to your requirements.

Therefore such demo shops cannot be properly adjusted and optimized to custom needs. Sooner or later you will need to pay for the services that will enable you to operate a store which is always up-to-date, fast, stable and reliable offering a flawless user experience to your shoppers.

 

What is managed hosting?

 

Before you start running your online store in the cloud, it’s worthwhile for you to take your time and collect information about what kinds of solutions and providers there are on the market.

If your ecommerce store is still before development, it’s a good option if you choose a company that deals with both development and cloud hosting. This has a great advantage for the future: later misunderstandings and frictions between the developer and the hosting service provider can be avoided.

 

What kind of issues can arise that can finally leave the merchant helpless?

A ton of problems can emerge, now let’s see a simple and frequent one:If you experience that your website slows down, you naturally would like to know the reason for that.

You’ll first turn to the developers who may blame the hosting provider saying they  haven’t integrated the online store in the proper way.

The answer from the hosting company could  be that the code is not optimized or that it’s flawed so that caching solutions cannot be implemented.

And the story goes on and on…

It may be better to choose a company that provides both services.

If the hosting and development are in one hand, they are more likely to have the expertise to operate your store reliably, taking special care of performance and data security.

 

Managed hosting is basically an extension of normal hosting (whether in a dedicated or shared environment), where the service provider leases out not only the basic infrastructure, but it also adjusts the environment to the specific business application (e.g. Magento).

In addition, the provider installs and maintains all those micro services that help the application run faster, more smoothly and more safely.

 

In the case of Magento these can be

      • MySQL,
      • Redis,
      • Varnish,
      • CDN
      • and search servers.

 

There can be other micro services to be needed since every single ecommerce application can be very different.

In the scope of managed hosting, this sysadmin or sysop tasks are included in the contract.  Pricing can vary a lot because these services require high level competencies and each provider may work with different service portfolios.

 

To summarize it: in case of managed hosting, you not only hire  the hardware infrastructure but buy the competency needed for installation and operation, too.

 

Afterwards, you only need to handle the application as a business user. Therefore it is very important to clarify responsibilities and authentications on both sides.

Based on the scope and quality of the service implemented, there can be many ways of defining the tasks of managed hosting. This list of services and definitions can either be shortened or broadened according to how the parties make agreements.

 

Let’s take a look at the most important aspects:

      • Server Monitoring Monitoring actively the servers. In a preventive way, smaller errors can be detected and solved before getting more serious.
      • Security – Anti-virus protection, spam filtering, firewall and operating system configuration and updates belong here. Security is of high-priority with every computer and every network, especially where personal or business data may get damaged. This includes Operation Security, Security and Safety tasks, accessing and saving data, according to the SLA guides. Security certifications of the store are also important. They used to be checked mostly by payment gateways and banks, but nowadays Google also takes it into consideration as a ranking factor.
      • Overall security back-up and storage – Losing data is a loss on several levels for a company: it consumes time, money and weakens customer satisfaction. Thus the service provider has to get prepared to enhance stability with regular back-ups, storing and archiving data according to its security routine.
      • Support – Service providers give support on an ongoing basis and continuous service availability to avoid downtimes. If a problem arises, the client can notify the provider and the necessary steps can be taken immediately. There is a number of types for the support service:  e.g. by telephone, via email, all year round, 24/7.

 

A well managed hosting service has several advantages for your business.

 

Let’s summarize these:

  • Lower costs of operation – Paying for the hardware environment and maintenance can be difficult for many businesses.
  • For ecommerce store owners, the costs of investment and the returns don’t match up so they cannot get an edge on that.
  • Hosting service providers can help the client use the infrastructure in a cost effective way. Scalability is an important factor, too.
  • Example: in case of peaks, when there is a need for larger computing capacity (e.g. during the pre-holiday period), you can allocate bigger resources. As a compensation, you can run your store for the rest of the year with cheaper operation.
  • More efficient resource management – If the client employs IT specialists, then he knows exactly that a reliable, competitive workforce should be paid high salaries so it’s of crucial significance to rationalize the resources. If the client can find this kind of expertise “externally”, with the service provider, then the in-house IT personnel can spend more time solving company issues and supporting their colleagues.

 

How and what do you pay for when using AWS hosting?

 

AWS offers its more than 70 cloud-based services on a „pay-as-you-go” basis.

There’s no trick here. You’re invoiced only for those items that you really used, based on the duration of the service use. There are no binding, long-term contracts (however, it’s worth giving it a thought for getting considerable discounts) or infrastructure start-up fees.

Similarly to electricity or heating costs, Amazon measures and records all usage and sends a detailed report of it in the accounting period, usually on a monthly basis. If you don’t need any of the hosting service components, then you just stop using it and that’s it.

One of the main advantages is that you don’t have to calculate with considerable investments or upfront costs.

All costs related to hardware assets (e.g. servers, active network tools), rents and rates of real estate and software licence fees, are all included in the price of the hosting service. So you can calculate with predictable and far lower prices for operation and maintenance.

Thanks to the pay-as-you-go model, your IT infrastructure can flexibly adjust to the rapidly or frequently changing business requirements. As we’ve already mentioned, resources can be triggered or stopped fast, therefore you can save money and avoid overspending or, on the contrary, avoid losses due to underestimations.

 

tips The point:  You can use your own resources for corporate development in a much more predictable and cost-effective way allowing you to react dynamically to changing market patterns.

 

AWS is willing to give a volume discount as consumption increases. With services such as S3 or EC2, data export is layered.This means that the larger your data traffic, the lower the cost of service per gigabyte.

Besides, data import is free. As a consequence, as AWS usage needs to be increased, economies of scale take effect which facilitates controlling and optimizing costs. As your business is growing, AWS allows you to get those services more easily that help to handle new business needs.

For example, the fees of the data storage portfolio of AWS may be reduced based on how frequently and quickly you want to access your data. In order to optimize savings, you need to choose a combination of the specific storage solutions that help in cost optimization while not making a compromise on performance and security either.

With certain services, like Amazon EC2 and Amazon RDS, you can utilize the given capacity. In the case of the applied Instances, you can even save 75% of capacity. These savings can be realized on the basis of three payment options: All up-front (Auri), Partial up-front (Puri) or No up-front (Nuri).

Staying with the above example, the larger the starting instalment, the larger the discount.

So, to receive the maximum discount available, it’s worth paying out all up-front costs.

With partial up-front payments discounts are smaller, but the start-up costs are also lower. If you don’t want to pay up-front costs at all, you’ll get only the smallest discount available, however, in this case you may keep funds for other business projects you consider important.

 

What types of costs does Managed Magento Hosting have?

 

What kind of information is taken into consideration when a managed Magento hosting service provider calculates costs?

On the one hand, in the case of AWS, the fees are public, anyone can check them at the simple monthly calculator of AWS. However, if you request a quote from a hosting service provider, you’ll get different cost figures, which shouldn’t be a big surprise, should it?

The cloud hosting service provider gets the AWS service at the same price as you see on AWS’s calculator site.

The added value you get from the hosting company lies within the services expert team gives you:

        • Fine-tuning and tailoring AWS to the needs of your ecommerce store,
        • Migration,
        • Configuring and updating servers,
        • Managing database back-ups,
        • and all the other IT competence the client doesn’t have to deal with,

letting them focus their attention to store operation, marketing, customer service etc.

The client pays the extra costs for this kind of service.

Most hosting service companies show their prices openly, in other cases, if you click on the “Pricing” tag, you are simply redirected to the contact page so that you can get a custom price.

If the prices are shown, it is a usual approach that you meet different price categories or pricing packages for different hosting portfolios.

When comparing these, you’ll notice that there are no big differences, mostly, you see 4-5 package offers, with a rather wide price range of $35 ‒ $5000.

 

tips Important: AWS always indicates prices in US dollars, so it’s worth paying special attention to any quote in another currency you get from a service provider.

 

We at AionHill offer a one-server AWS environment between $150 ‒ $760, while for a multi-server infrastructure we generally charge between $500 ‒ $1600.

There are no two identical requirements, just as there are no two identical online stores.

Therefore it’s wise if you let the IT experts of your chosen cloud hosting company set the most appropriate environment possible. For that a wide range of IT capabilities will be needed so that an accurate price calculation can be made in the end.

 

What to expect when negotiating with a cloud hosting service provider?

 

Sizing up technical parameters takes place either via email in advance or in person, with the involvement of AWS specialists in the estimation process. As the client, you need to know why you’d like to migrate your ecommerce store to the AWS Cloud, what benefits this will have, what costs and downtime it will call forth.

Logically, the more complex and customized your system, the more sophisticated the solution you’ll need. The more tailored solutions you expect, the more resources are needed for the process.

However, if you add up all the costs of buying, installing and managing your own server infrastructure and compare it to the costs of managed hosting, then you’ll clearly see that your cloud investments will likely pay off even in the mid-term.

 

The most critical data can be obtained from Google Analytics. This is enough for the hosting company to start their calculations. Additionally, there can be some questions that only your IT team or former developers can answer. It’s also worth drawing up a draft of the public part of the server topology and its specifications (Visio).

 

Let’s see what kind of questions you may encounter:

      • What is the daily visitor number on your website?
      • What is the number of started sessions in a month?
      • In the case of peaks, what was the highest number of sessions in the given period?
      • How frequently do these peaks occur in a given fiscal year?
      • Which version of Magento do you want to have developed or which version type would you like to migrate?
      • What is the number of SKU’s in your store at the moment?
      • What specifications do the present servers have?
      • What type of external systems does your store communicate with and are there any plans for expanding this infrastructure (database type and size, invoicing software, ERP, CRM etc.)?

 

What services and technologies should you expect from the cloud service provider?

 

Your Magento ecommerce store has to meet a set of requirements in order to be able to serve your clients’ needs in an adequate quality. That includes a lot of things starting from the professional competence of the operator, through the used technologies that are kept up-to-date, to customer support:

      • What kind of services are provided to the client in addition to the leased infrastructure, and how can the online shop owner benefit from them?
      • How is data security guaranteed?
      • Through which channels communication and error reporting are done and how efficient are they?

 

A bit earlier we summarized the basic tasks, however, if the satisfaction of the client is important to the hosting company, those won’t be enough.

 

What should you pay attention to as a client in the “gate” of the cloud?

 

Migration

In case you’d like to see your already existing, finished ecommerce store in the cloud, professionals of the service provider will manage the complete process, but in order to be able to accomplish that, they will most probably need to cooperate with the owner of the online shop or the IT specialists of the store.

You should facilitate that as a client, as a contact person, and you should also be sure that everything on both sides is documented for the sake of being able to be followed up.

 

Pay attention to the following:

      • Does the service provider inform you about the circumstances of the migration?
      • Is the process subject to separate pricing or is it built in the price of the service?
      • What time-frame do they undertake for the completion of the task, and how much does that affect the business continuity, how much loss or downtime should the ecommerce store expect?

 

Be consistent and circumspect, not only with your business partner, but with yourself as well! You should rather ask a question several times during the negotiation process rather than to experience some kind of technical obstacle at a critical time.

 

Code audit

When the service provider is hired to migrate an ecommerce store to the cloud, smooth and quick operation of the shop is a legitimate expectation. However, the proper operation does not depend only on the server environment, but on the combination of the environment and the development together.

Hosting companies – just like developers – use certain cache procedures, technologies, the use of which makes the page load faster, optimizes the reach of the static content, or it gains the valuable data from the behavioural patterns of the shop’s visitors with analytical techniques. Data which will help you make “Data Driven Decisions”.

 

tips Attention!:  Access to the code of the ecommerce store is necessary for the use of such technologies, in order to find out the quality of the code with the appropriate examination and to find out whether these technologies can be applied. If a service provider doesn’t bring up the possibility of this in case of a page that should be migrated, you should start having doubts of their professionalism!

 

SSD and EBS

Nowadays there’s an increasing number of service providers who store your data on “Solid State Drive” in order to achieve higher write/read values.

These drives have already spread even among the public users in the last few years. And in the case of cloud hosting, this technology can almost be considered as a must. In the cloud of Amazon, you can find both SSD and so-called EBS (Elastic Block Storage) storage solutions.

The most important difference between them is their flexibility: you can attach or detach EBS to an Instance any time, which means it’s independent of servers, while SSD is physically within the server.

 

Apache and NGINX

Apache and NGINX are the two most used open-source code web servers in the world. Together they account for 50% of the traffic realized through the internet. Both solutions allow various work loads and they are capable of working with other pieces of software, forming a kind of web stack.

 

Apache

This solution is often chosen thanks to its flexibility, strength, and because it’s widely supported. It can be extended with a dynamically loadable module system that’s capable of processing a lot of scripting languages without having to use a separate software application for that.

 

 

NGINX

In 2002, Igor Sysoev started to work on NGINX, trying to find a solution for the C10K problem (management of 10,000 concurrent connections) that was a great challenge for the web servers, which was a prerequisite for the modern world wide web.

Thanks to the exploitation of such a small resource and its flawless operation on minimal hardware, popularity of NGINX has been increasing ever since its release.

NGINX manages the static  content perfectly, and it was created in a way that it redirects the dynamic queries to another software application that is much more suitable for their management.

 

Varnish Cache

This is a widespread caching technology, because it increases the performance of the web page extremely effectively by being able to reduce the load time on the server side.

This feature facilitates not only the improvement of the user experience, but it makes this technique popular from an operational point of view as well.

Another strength of this technique, in addition to loading optimization, is ESI (Edge Slide Includes), which breaks the page down into components and “boosts” these elements one by one independently.

 

Load Testing

 

Load testing is a type of non-functional testing.

It is a type of software testing which is conducted to understand the behaviour of the application under a specific expected load.

Load testing is performed to determine a system’s behaviour under both normal and peak conditions.

It helps to identify the maximum operating capacity of an application as well as any bottlenecks and to determine which element causes degradation. E.g. If the number of users increases, how much CPU, memory will be consumed and what network and bandwidth response times are to be experienced.

Load testing can be done under controlled lab conditions to compare the capabilities of different systems or to accurately measure the capabilities of a single system.

When computing in Amazon’s cloud, we might want to think a bit different from the traditional ways. The old(er) methods do not seem to work well with CloudFront, Amazon’s CDN service.

It uses DNS to balance loads across geographically dispersed edge locations and within each edge location.

CloudFront is designed to scale for viewers that have different client IP addresses and different DNS resolvers across multiple geographic regions. To perform load testing that accurately assesses CloudFront performance, we recommend doing all of the following:

  • Send client requests from multiple geographical regions.
  • Configure your test so each client makes an independent DNS request; each client will then receive a different set of IP addresses from DNS.
  • For each client that makes requests, spread your client requests across the set of IP addresses that are returned by DNS, which ensures that the load is distributed across multiple servers in a CloudFront edge location.

 

Security in the cloud of AWS

 

In the life of a company, be it a medium-sized enterprise or a small start-up ecommerce store, it’s many times the attitude that prevents the business from moving into the cloud and not the capacity problems.

In the developing countries, companies often strongly insist on having their own machine farm, servers being within reach, just as if their physical proximity in itself would guarantee the security of company data.

 

AWS provides a lot of solutions for the security of the critical data, of work networks, and of the quick but reliable access:

      • Network firewalls have been built into Amazon VPC, and AWF WAF (Web Application Firewall) allows creation of private networks within the cloud, furthermore, access to the servers and the applications can be restricted
      • TLS encryption is provided for all services
      • Private or dedicated connection options, from place of work or from a desired secure environment

 

"I really believe that you have no business on the internet if you do not make protection of your customers a top priority.… We are responsible for the security of the cloud. We innovate rapidly so you have the tools to protect your business in the cloud."Werner Vogels, VP & CTO at Amazon.com

 

DDoS – Massive, Distributed Denial of Service attack

 

      • Accessibility in case of cloud-based services is of vital importance. The technologies used by AWS today are already resistant to distributed denial of service attacks.
      • The appropriate combination of the services guarantees the strategy against DDoS. When experiencing such an attack, the different services automatically notify the other parts of the system, thus minimizing any time loss and the effect of the attack.
      • Auto scaling of AWS, CloudFront and Amazon Route 53 (which is a DNA service) together help prevent or alleviate any DDoS attacks.

 

AWS encryption

 

Encryption of AWS is another security level for the protection of the data within the cloud. It’s also well scalable and effective:

      • The encryption is available for the data storing and database services such as EBS, S3, Glacier, Oracle RDS,SQL Server RDS and Redshift.
      • The flexible key management settings, like the AWS Key Management Service, allow setting whether AWS or you have full authority over the management of accesses.
      • Thanks to the dedicated, hardware-based encryption key storage, AWS CloudHSM allows you to meet the compliance requirements

 

In addition, AWS provides APIs, through which other encryption and data protection solutions and applications can be installed.

 

Monitoring and logging

 

The tools and services that allow you to clearly see and monitor the processes and incidents going on in your AWS system are available:

        • The entire monitoring of the API calls, thanks to which you can see the full, detailed log, is done by AWS CloudTrail
        • Complete logging of reports, tests, aggregation settings
        • The setting options of notifications, alerts when certain incidents happen or when a pre-set limit is exceeded is available with Amazon CloudWatch